Antinuclear

Australian news, and some related international items

Australian Productivity Commission (hardly radicals!) wants clean energy target

What the National Energy Guarantee lacks though is a formal clean energy target, which, in the absence of a carbon pricing scheme, would at least be a market-based mechanism that provides incentives for low emissions and renewable generation.

the report concludes that advocates of coal-fired generating capacity who oppose carbon pricing are doing themselves a disservice, as investors are unlikely to commit to the investment needed, given future regulatory risks.

 Report throws book at ‘energy mess’ saying governments must get serious on carbon emissions http://www.couriermail.com.au/news/opinion/opinion-report-throws-book-at-energy-mess-saying-governments-must-get-serious-on-carbon-emissions/news-story/b121d3e13e10d74cfce74b8816de2e88, Paul Syvret, The Courier-Mail, October 28, 2017 

THE Australian Productivity Commission – the Federal Government’s economic advisory body that recommended cuts to weekend penalty rates – is not renowned as a hotbed of left-wing activism.

On Tuesday Treasurer Scott Morrison released the first of the commission’s five-year reviews, using the document as a platform to mount a case for continuing economic reforms to lift Australia’s productivity rate.

The ideas in the 1200-page document – ranging across the full spectrum of the Australian economy – should have dominated debate at a time when the Government is trying to wrest back control of the political agenda.

The Michaelia Cash trainwreck put paid to that, despite Morrison’s best efforts to warn that “the price of a generation of Australians growing up without ever having known a recession is that reform comes more stubbornly and incrementally”.

What Morrison didn’t highlight though was Chapter 5 of the Productivity Commission report, titled “Fixing the energy mess”.

In this section, the commission says Australian governments “must stop the piecemeal and stop-start approach to emission reduction and adopt a proper vehicle for reducing carbon emissions that puts a single effective price on carbon”.

The commission laments the fact that the basic framework of a sound energy sector has “been lost along the way in the energy wars”, and it goes as far as saying that trying to muddle through without clarity on carbon pricing is “counterfactual”.

“It is a principle of every properly designed pricing system that the charge should reflect its harms.

“Thus, carbon emission intensity is necessarily a matter to be reflected in the regulated pricing system. The compromises necessary to do this are much-debated, but what should be accepted is that low-carbon technologies (such as solar and wind generation) are inherently part of the properly priced future.”

The Government, which has taken a significant step forward in defusing the said energy wars with the release of its National Energy Guarantee plan, has made much of the fact that it has adopted 49 of the 50 recommendations contained in the energy market review conducted by Chief Scientist Alan Finkel.

What the National Energy Guarantee lacks though is a formal clean energy target, which, in the absence of a carbon pricing scheme, would at least be a market-based mechanism that provides incentives for low emissions and renewable generation.

Here the Productivity Commission is blunt in its assessment. “In the case of Finkel,” it says, “49 out of 50 is not a pass mark.”

Bear in mind that the Productivity Commission’s raison d’etre is improving efficiencies in Australia and it views the world through the prism of economics not a sense of environmental evangelism.

It is in this context that the commission’s conclusions on the desirability of a CET – or, as it terms it, a low-emission energy target – should be considered.

“It would better reward lower emitters and, depending on its detailed design, would move Australia’s energy market closer to the outcomes that would arise from full carbon pricing.

“The critical point is that while there are various ways of placing prices on carbon, establishing an agreement on one of them, even if not perfect, provides a guide for investment toward the lowest-cost emission-reduction options.”

In fact, the report concludes that advocates of coal-fired generating capacity who oppose carbon pricing are doing themselves a disservice, as investors are unlikely to commit to the investment needed, given future regulatory risks.

“Thus, doing nothing on emissions intensity (via price, or via some other proxy) is most likely to ensure that the fear of redundancy for coal will become a reality.”

Sadly though, respect for science, logic and basic economic principles have not been a prominent feature of energy policy debate in Australia.

 

 

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October 27, 2017 - Posted by | AUSTRALIA - NATIONAL, business, climate change - global warming, politics

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